Cell behavior in higher eukaryotes is regulated by a large number of proteases, protease inhibitors, cellular receptors for proteases, and matrix endocytic receptors that operate in the pericellular environment to provide focal proteolysis that is essential for cytokine/growth factor maturation, matrix remodeling, signaling receptor activation, shedding, ion channel activity, and more. We are continuing our efforts to unravel the molecular functions of membrane-anchored serine proteases and cellular matrix endocytic receptors in vertebrate development, epithelial homeostasis, and epithelial carcinogenesis. Research accomplished: Genetic epistasis analysis identifies a prostasin-matriptase developmental pathway regulating placental branching morphogenesis and neural tube closure. We have previously shown that loss of either of the two transmembrane Kunitz-type serine protease inhibitors, hepatocyte growth factor activator inhibitor (HAI)-1 or -2 is associated with embryonic lethality in mice. This lethality, however, can be rescued by the simultaneous inactivation of the membrane-anchored serine protease, matriptase, thereby demonstrating that a matriptase-dependent proteolytic pathway is the critical developmental target for both protease inhibitors. We exploited this finding to perform a biased genetic epistasis analysis to identify additional components of this developmental proteolytic pathway. Specifically, we generated mice with combined deficiency in either HAI-1 or HAI-2 and in genes encoding developmentally co-expressed candidate matriptase targets and screened for the rescue of embryonic lethality. Interestingly, a hypomorphic mutation in Prss8, encoding the GPI-anchored serine protease, prostasin, restored normal development of HAI-1-deficient embryos, and prevented early embryonic lethality, mid-gestation lethality due to placental labyrinth failure, and neural tube defects in HAI-2-deficient embryos. In contrast, ablation of Hgfr, encoding c-Met, F2rl1, encoding protease-activated receptor-2 (PAR-2) or Scnn1a, encoding the alpha subunit of the epithelial sodium channel (ENaC), all failed to rescue embryonic lethality, suggesting that deregulated matriptase causes developmental failure independent of aberrant c-Met and PAR-2 signaling, or impaired epithelial sodium transport. Paradoxically, although matriptase is generally recognized to auto-activate and is a well-established activator of prostasin in squamous epithelium, biochemical analysis of matriptase- and prostasin-deficient placental tissues revealed an absolute requirement of prostasin for conversion of the matriptase zymogen to active matriptase. Taken together, these data reveal a HAI-1- and HAI-2-regulated prostasin-matriptase developmental pathway and a novel role of prostasin in regulating matriptase activation (see follow-up studies below). A matriptase-prostasin reciprocal zymogen activation complex with unique features: prostasin as a non-enzymatic co-factor for matriptase activation. Matriptase is generally believed to be an autoactivating protease that functions at the apex of proteolytic cascades that regulate epithelial development and homeostasis. The above findings unexpectedly revealed that prostasin in some developmental contexts is required for matriptase activation. We therefore used a reconstituted cell-based system to further investigate the mechanistic interrelationship between the two proteases. By using a battery of matriptase and prostasin mutants, we found that matriptase and prostasin form a reciprocal zymogen activation complex with unique features. Thus, prostasin served as a critical co-factor for matriptase activation. Unexpectedly, however, prostasin-induced matriptase activation required neither prostasin zymogen conversion nor prostasin catalytic activity, as shown by the ability of both zymogen-locked and catalytically inactive prostasin mutants to activate matriptase and stimulate its activity towards PAR-2. Prostasin zymogen conversion to active prostasin, conversely, was dependent on matriptase, but did not require matriptase zymogen conversion, as shown by the ability of five different zymogen-locked versions of matriptase to activate prostasin. Consistent with these findings, wildtype prostasin, zymogen-locked prostasin, and catalytically inactive prostasin all were biologically active in vivo when overexpressed in the epidermis of transgenic mice, giving rise to a severe skin phenotype. Our finding of non-enzymatic stimulation of matriptase activation by prostasin and activation of prostasin by the matriptase zymogen provides a tentative mechanistic explanation for several hitherto unaccounted for genetic and biochemical observations regarding these two membrane-anchored serine proteases and their downstream targets. A role of matriptase in intestinal epithelial barrier recovery. We have recently reported that ablation of colonic matriptase in mice results in the loss of the intestinal epithelial barrier, which is followed by the rapid development of inflammatory bowel disease-like colitis and colitis-associated colon cancer. To further explore the contribution of matriptase-dependent proteolysis to intestinal epithelial homeostasis, we determined the expression of the membrane-anchored serine protease in human inflammatory bowel disease in a collaboration with Toni Antalis, University of Maryland. Interestingly, matriptase mRNA and protein were significantly downregulated in inflamed colonic tissues from both Crohn's disease and ulcerative colitis patients. Consistent with this, signature inflammatory cytokines implicated in colonic barrier disruption during inflammatory bowel disease suppressed matriptase expression in colonic epithelial cell monolayers, suggesting a direct link between inflammatory cytokine production, reduced matriptase expression, and the loss of the intestinal epithelial barrier. Compatible with this notion, mice carrying hypomorphic alleles of matriptase displayed sustained cytokine production, associated with an inability to recover barrier integrity after dextran sodium sulfate-induced colitis. Taken together with our previous studies, these data suggest that intrinsic defects in epithelial barrier-forming molecules, in addition to or alternatively to primary immune system defects, may initiate inflammatory bowel disease and other epithelial inflammatory diseases (see below). Capillary morphogenesis protein-2 is required for mouse parturition by maintaining uterine collagen homeostasis. Capillary morphogenesis protein-2 (CMG2) is a recently identified transmembrane glycoprotein with putative collagen binding properties. Mutations in ANTXR2, encoding CMG2, cause two human autosomal recessive disorders, Juvenile Hyaline Fibromatosis and Infantile Systemic Hyalinosis, both of which are characterized by excess extracellular matrix deposition in connective tissues. To study the roles of CMG2 in normal physiology, we have performed a detailed analysis of CMG2-deficient (Antxr2 null) mice. While no morphological or histological defects were observed in male mice, CMG2-deficient female mice were unable to produce any offspring due to a defect in parturition. We found that deletion of CMG2 resulted in a diffuse deposition of collagen within the myometrium of CMG2-deficient females, causing remarkable morphological changes to their uteri. This collagen accumulation caused a loss of smooth muscle cells in the myometrium, apparently disabling uterine contractile function during parturition. As a consequence, even though pregnant CMG2-deficient mice were able to carry the gestation to full term, they were unable to deliver pups. However, the fully developed fetuses could be successfully delivered by Cesarean section and survived to adulthood when fostered.